Canadians now increasingly engage in “out shopping,”

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by magnus opus » Tue Oct 12, 2010 11:33 pm
notwithstanding A seems best out of the lot, there is still a flaw in the argument+choice A.

The argument does not say the canadian government needs to spend or spends all of the amount it collects through the tax.
If that is the case then it is not necessary that a higher tax rate will be assesed.
Say govt. collects 5 billion, but spends only a million on social services, then despite a significant upward trend there might not a be need for concern.

Looking at D- that same brands are available across the border- you refer back to the stimuli and it says prices are "lower"( comparative) across the border. Npw to effectively compare two things they need to be essentially the same but not identical.
That is a premium brand can be compared with a brand with only such a quality but they neednt belong to the same company.

Now both A and D have flaws so how does one make a pick?

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by GMATGuruNY » Wed Oct 13, 2010 3:07 am
Canadians now increasingly engage in "out shopping," which is shopping across the national border, where prices are lower. Prices are lower outside of Canada in large part because the goods-and-services tax that pays for Canadian social services is not applied.

Which one of the following is best supported on the basis of the information above?

(A) If the upward trend in out-shopping continues at a significant level and the amounts paid by the government for Canadian social services are maintained, the Canadian goods-and-services tax will be assessed at a higher rate. Correct (or at least better than the rest). Out-shopping means that Canadians are avoiding the goods-and-services tax that pays for social services. Thus, if the amounts paid for social services are maintained, the tax rate likely will need to increase in order to compensate for the lack of people paying the tax.
(B) If Canada imposes a substantial tariff on the goods bought across the border, a reciprocal tariff on cross-border shopping in the other direction will be imposed, thereby harming Canadian businesses. Outside the scope. The passage doesn't discuss tariffs.
(C) The amounts the Canadian government pays out to those who provide social services to Canadians are increasing. Not supported. The passage does not indicate that the cost of social services is increasing.
(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada. Not supported. While the products being purchased across the border are likely similar to those that would have been purchased in Canada, nothing in the passage suggests that Canada and other countries sell the same brands of these products.
(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada. Not supported. The passage does not indicate that a tax is assessed when foreign purchases are brought into Canada.

The correct answer is A.

Answer choice A is indeed flawed, but it's better supported by the passage than any of the other answer choices. On the GMAT, answer choice A likely would say also that if no other source of revenue can be found, then the tax would need to increase.

Hope this helps!
Last edited by GMATGuruNY on Fri Oct 15, 2010 4:53 am, edited 1 time in total.
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by Tani » Wed Oct 13, 2010 6:33 am
We have no idea whether the same brands are there or not. And it doesn't matter. Canadians are shopping in the US because of prices. Brands are never even mentioned in the stimulus and are therefore out of scope.

I agree that A is flawed, but it is the only one that is close. I don't know where this question came from, but it does not meet the standards for a GMAT inference questions in that the answer "Must" be true. Obviously the Canadian government would have several means to compensate for the loss tax revenue.
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by magnus opus » Wed Oct 13, 2010 8:09 am
thanks alot for the explanations

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by lunarpower » Fri Oct 15, 2010 3:56 am
yeah -- wow, this is a horrible question. totally worthless.
in fact, worse than worthless -- this is one of those problems that will very likely cause you to un-learn the things that you should be learning and to learn incorrect principles in their place. (!!)

this question is so horrible that it casts doubt on the integrity of the entire source from which it came.
two things:
1) what is the ORIGINAL SOURCE of this question?
that'd be good to know, so that you can henceforth be extremely suspicious of problems from that source.
2) if the problem is from an unknown source, you are taking a great risk by using it. there is a LOT of very bad material out there from third-party sources, especially in verbal; for this reason, it's best to stick with material that's known to come from reputable sources.

--

as tami points out above, the correct answer to a "best supported" question should be something that MUST BE TRUE BEYOND ANY REASONABLE OBJECTION -- a standard that no answer choice here comes even close to meeting.
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by mundasingh123 » Fri Oct 15, 2010 4:56 am
GMATGuruNY wrote:Canadians now increasingly engage in "out shopping," which is shopping across the national border, where prices are lower. Prices are lower outside of Canada in large part because the goods-and-services tax that pays for Canadian social services is not applied.

Which one of the following is best supported on the basis of the information above?

(A) If the upward trend in out-shopping continues at a significant level and the amounts paid by the government for Canadian social services are maintained, the Canadian goods-and-services tax will be assessed at a higher rate. Correct (or at least better than the rest). Out-shopping means that Canadians are avoiding the goods-and-services tax that pays for social services. Thus, if the amounts paid for social services are maintained, the tax rate likely will need to increase in order to compensate for the lack of people paying the tax.
(B) If Canada imposes a substantial tariff on the goods bought across the border, a reciprocal tariff on cross-border shopping in the other direction will be imposed, thereby harming Canadian businesses. Outside the scope. The passage doesn't discuss tariffs.
(C) The amounts the Canadian government pays out to those who provide social services to Canadians are increasing. Not supported. The passage does not indicate that the cost of social services is increasing.
(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada. Not supported. While the products being purchased across the border are likely similar to those that would have been purchased in Canada, nothing in the passage suggests that Canada and other countries sell the same brands of these products.
(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada. Not supported. The passage does not indicate that a tax is assessed when foreign purchases are brought into Canada.

The correct answer is A.

Answer choice A is indeed flawed, but it's better supported by the passage than any of the other answer choices. On the GMAT, answer choice A likely would say also that if no other source of revenue can be found, then the tax would need to increase.

Hope this helps!
@Gmatguruny , tani wolf
kellogs cornflakes cost 3 dollars in canada .If Kellogs cornflakes is not available in US and the customer is compelled to buy some other brand , then how will we be able to say that Kelloggs cornflakes are cheaper in US
Last edited by mundasingh123 on Fri Oct 15, 2010 5:02 am, edited 1 time in total.

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by mundasingh123 » Fri Oct 15, 2010 5:00 am
@GMATGURUNY
Sir,the browser is giving me trouble so posting a new reply.
IN A , arent we deducing / assuming that the government will try to increase the tax to make up for those people who do not buy Canadian goods.
The government can also decreas the taxes to bring the Canadian Price at par with the US prices + travel cost , making it affordable to Canadians who are in the habit of shopping in the US.

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by GMATGuruNY » Fri Oct 15, 2010 5:28 am
mundasingh123 wrote:@GMATGURUNY
Sir,the browser is giving me trouble so posting a new reply.
IN A , arent we deducing / assuming that the government will try to increase the tax to make up for those people who do not buy Canadian goods.
The government can also decreas the taxes to bring the Canadian Price at par with the US prices + travel cost , making it affordable to Canadians who are in the habit of shopping in the US.
Yes, A requires that assumption. On the GMAT, answer choice A would have to make clear that no other sources of revenue are available. If the outshopping increases, the cost of social services stays level, and the tax is the only source of revenue available, then the tax will need to increase in order to compensate for the Canadians purchasing goods from other countries.

Since this question is inherently flawed, I suggest that we not dwell on it. Better to spend our time on more viable questions.
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by magnus opus » Fri Oct 15, 2010 6:20 am
lunarpower wrote:yeah -- wow, this is a horrible question. totally worthless.
in fact, worse than worthless -- this is one of those problems that will very likely cause you to un-learn the things that you should be learning and to learn incorrect principles in their place. (!!)

this question is so horrible that it casts doubt on the integrity of the entire source from which it came.
two things:
1) what is the ORIGINAL SOURCE of this question?
that'd be good to know, so that you can henceforth be extremely suspicious of problems from that source.
2) if the problem is from an unknown source, you are taking a great risk by using it. there is a LOT of very bad material out there from third-party sources, especially in verbal; for this reason, it's best to stick with material that's known to come from reputable sources.

--

as tami points out above, the correct answer to a "best supported" question should be something that MUST BE TRUE BEYOND ANY REASONABLE OBJECTION -- a standard that no answer choice here comes even close to meeting.


LOL :)
Its from the material that my gmat instructor gave me to do. and advises everyone to do. no wonder no is getting an above 40 score in verbal...

ur a life saver ron.